Jabong transfers over 100 staff to studio firm Moksha

The move will help the e-commerce company to reduce its operational liabilities, said 3 people who have been transferred from Jabong to Moksha.Shambhavi Anand | ET Bureau | Updated: August 31, 2015, 09:14 IST

Rocket Internet-backed e-commerce firm Jabong has transferred over 100 employees from its production department to the payrolls of Moksha, a production studio which produces pictures and video content for e-commerce companies, including Jabong.

This will help the fashion e-commerce company to reduce its operational liabilities, said three people who have been transferred from Jabong to Moksha.

All employees from the production and creative team have been made to resign from Jabong and given offer letters of Moksha. Among those transferred are photographers, stylists, videographers, production artists and the studio team.

Moksha is a Delhi-based creative studio which helps e-commerce companies in their production work such as still photography and making catalogues. Apart from Jabong, they also work for other e-commerce players such as Snapdeal and Amazon.

Praveen Sinha, co-founder and managing director of Jabong, however, denied this in an email response saying this was “not true news”.

Transferring out non-core employees to the payrolls of a back-office outsourcing company is common practice in the information technology industry.

Recently, Flipkart moved about 300 employees to the payrolls of business process outsourcing firm Serco citing it as a strategic move to help it scale faster and also grow the partner ecosystem around it.

While Flipkart had given a generous financial package to each of the transferred employees, including a salary hike, people familiar with the matter say that those transferred from Jabong to Moksha have not been given any financial benefit.

Jabong has been under pressure from Rocket Internet which has also made structural changes in the top management of Jabong in which chief executive officer Arun Chandra Mohan and managing director Praveen Sinha are being replaced.

“One of the reasons companies, especially startups, look at outsourcing is to allow management to focus more on their core business,while the outsourced non-core areas such as accounting, technology, HR, etc, are left to the specialists. While this may not always result in any direct cost savings, it does lead to efficiencies in those areas,” Sai Venkateshwaran, partner and head, accounting advisory services at KPMG in India.

Jabong was founded in 2010 by Mohan, Sinha and two other promoters who have since left the company. While the company more than doubled its revenue to Rs 811 crore in the calendar year 2014, its deep-discounting strategy caused losses to swell fivefold to Rs 160 crore, up from Rs 32 crore in the previous year. The portal also faces intense competition from rivals such as Myntra and several other e-commerce players.